We take a look at categories where AI startups are beginning to emerge. A majority of them are in the early stages of funding.|We take a look at categories where AI startups are beginning to emerge. A majority of them are in the early stages of funding.

Where is this data coming from?

Start your free trial today

Email

Where is this data coming from?

Start your free trial today

Email

Artificial Intelligence is being hailed as the new linchpin of the tech industry. Although machine learning algorithms have been around for decades, the advances in hardware processing capabilities and access to big data have ushered in a new era of AI applications. Areas like healthcare, IoT, and cybersecurity, where there are a massive number of data points available, were quick to adopt and experiment with AI algorithms. But deals are slowly emerging in other verticals like legal tech, travel tech, real estate, and media & entertainment. From established law firms investing in AI startups to smart money VCs backing AI companies in the gaming industry, newer possibilities are emerging every day.

“Just as electricity transformed almost everything 100 years ago, today I actually have a hard time thinking of an industry that I don’t think AI will transform in the next several years.” – Andrew Ng, former chief scientist at Baidu

The artificial intelligence deals tracker shows the distribution of AI deals across different categories. We focused on some of the emerging AI categories in the lower half of the heat map to analyze the use cases for AI in these industries, VC interest, startup funding, and notable startups to watch.

Report: The State of Artificial Intelligence

A data-driven look at financing trends, investors, and hot markets within the artificial intelligence ecosystem

Email

In this article, we cover emerging AI applications in the following verticals and identify key startups to watch in each area:

Legal Tech

Artificial intelligence has a huge potential to reduce time and improve efficiency in legal work. On the litigation side, natural language processing (text analytics) can summarize thousands of pages of legal documents within minutes – a task that might take a human counterpart several days to complete – while reducing the probability of error. As AI platforms become more efficient and commercialized, this will impact the fee structure of external law firms that charge by the hour.

Big multinational law firms are already preparing for the changes AI would bring to the industry, and capitalizing on it. For instance, Europe-based Pinsent Masons claims it has developed its own AI technology, called Term Frame, which reportedly helped the firm in 7,000 matters ranging from dispute resolution to contract reviews.

Others are keeping a tab on the latest in tech through accelerator programs. For instance, NextLaw Labs, a wholly owned subsidiary of multinational law firm Dentons, invested in IBM Watson-powered AI legal tech startup ROSS Intelligence.

Legal tech AI startups raised around 7 deals last quarter. The top disclosed round was a $12M Series B round raised by Palo Alto-based Casetext, which is developing an AI-based legal research assistant, CARA. The round was backed by 8VC, Canvas Ventures, Red Sea Ventures, and Union Square Ventures.

Another startup, Israel-based LawGeex raised $7M in Series A last quarter to use AI for automatically reviewing business contracts. Smart money VC Floodgate seed-funded Text IQ, which is using natural language processing to help enterprise legal departments with investigations and document reviews.

Education and research

“Today’s interactivity is ok, I answered a few questions wrong, so then it repeats the lecture. [With an AI tutor,] I can engage in a dialogue…the beauty of this is it could be completely free.” – Bill Gates

In Q1’17, the Chang Zuckerberg Initiative acquired startup Meta (f.k.a. Sciencescape), which uses artificial intelligence to consolidate information from thousands of scientific papers and studies. As part of Zuckerberg’s philanthropy initiative, the Meta platform is set to aid the scientific community in their goal of curing and managing diseases.

AI in education has several possible applications, from the use of natural language processing to consolidate research information (like Meta’s platform), virtual tutors, AI-assisted paper grading, and personalized education programs. Startups here had their most active quarter in Q1’17 with 8 equity deals.

One of the most well-funded startups is Accel Partners-backed Osmo, which uses computer vision to engage children through iPad games.

Physical security

The emerging interest of AI in law enforcement and public safety was underscored by the Q1’17 acquisition of computer vision startup Dextro by smart weapon and body cam manufacturer TASER International. Dextro was developing deep learning-based video analytics solutions. In a press release, TASER announced that this technology will form the “backbone” of its new AI-focused initiative.

There are fewer startups in this category; only 5 companies raised funds in the last 2 years, with a major focus on facial recognition. (Note: Other facial and image recognition startups working across multiple industries are included in the horizontal AI category in the heatmap). The most well-funded startup here is late-stage startup Digital Signal Corporation, which is working on biometric imaging, facial analytics, and 3D identification.

California-based Shield.ai raised $10.5M in Q1’17 from Andreessen Horowitz and Homebrew to develop intelligent software for on-field robots and drones. The startup is reportedly working with US government divisions like the Department of Defense and Homeland Security.

Travel tech

In 2016, machine learning algorithms helped luxury hotels operator Dochester Collections modify their breakfast offerings based on an analysis of guest reviews, unearthing that guests like to customize their breakfasts. “The algorithm found that the ultra-wealthy actually do like the idea of a buffet — but only if it comes in the form of a waiter who says he can make anything,” Buzzfeed reported.

AI in travel tech is still an area of low deal saturation. Early-stage startups here are adopting both B2B and B2C models. In Q1’17, investors including JetBlue Technology Ventures and Thiel Capital participated in an $8M Series A round to FLYR, which is working on price optimization and demand forecasting, among other things.

News, Media & Entertainment

Although digital media deals dropped to the lowest number since Q2’12 last quarter, this quarter opened to the news of a $1B investment into China-based Toutiao, led by CCB International and Sequoia Capital China. The startup, currently valued at $11B, is using artificial intelligence for personalized news recommendations, and is also reportedly developing an artificial news report.

Other unique applications in this category that have piqued investors’ interest include AI-powered music composition (Amper, backed by Foundry Group), and performance analytics for gamers (Mobalytics, backed by Founders Fund and General Catalyst).

HR tech

“Recruiters spend 60% of their time reading CVs,” Juergen Mueller, SAP’s chief innovation officer, told the Wall Street Journal. “Why should a person read 300 resumes if a machine can propose the top 10?”

Some current use cases of artificial intelligence in HR tech include chatbots that answer repetitive questions, algorithms to help manage a massive pool of applicants, and “people analytics” platforms that aim to gauge culture fit of candidates and eliminate hiring bias.

HR departments may choose to outsource background checks of applicants to an outside firm. Some of these firms, like regulation tech company Onfido, then use computer vision to aid in identity verification.

One of the more well-funded startups here is hiQ Labs, which uses machine learning and humans in the loop to predict churn, improve employee retention, among other things.

Real Estate

One of the most well-known use cases of machine learning in real estate is Zillow’s “zestimate” feature, which estimates the price of homes.

Deals to startups applying AI to real estate tech started emerging in 2014, with just 2 deals that year, including a seed round to Amitree (AI-based Gmail assistants for real estate agents).

Deals started picking up in 2015, with startups building AI assistants, search engines to find office and retail spaces, as well as real estate-focused marketing solutions. The most well-funded company here is the previously mentioned Amitree, which raised $7.13M In Q1’17 from Accel Partners and Vertical Venture Partners.